FDR proposed the New Deal to reverse the downward economic spiral. The goal was relief, recovery, and reform for those who were hardest hit.

Policies

FDR launched the New Deal in three waves from 1933 to 1939. Congress passed dozens of programs to stabilize the U.S. financial system. They provided relief to farmers and jobs to the unemployed. They also built private-public partnerships to boost manufacturing.

First New Deal and Its Programs

Roosevelt was inaugurated on March 4, 1933. In his first 100 days in office, FDR pushed Congress to pass 15 new agencies and laws. Together, they created "capitalism with safety nets and subsidies," according to historian Lawrence Davidson.

Emergency Banking Act - March 9: FDR closed all banks as soon as he was inaugurated to stop bank runs. It was enacted at great speed. A special session of Congress passed the bill in seven-and-a-half hours. This Act allowed banks to reopen once examiners found them to be financially secure. Five thousand banks reopened in the next three days.

Government Economy Act - March 20: The Act cut the pay of government and military employees by 15 percent. It cut government spending by 25 percent. The $1 billion saved went to finance New Deal programs.

Beer-Wine Revenue Act - March 22: It legalized the sale of beer and wine and taxed alcohol sales, raising federal revenue. The Beer-Wine Revenue Act was followed by the passage of the 21st Amendment, which effectively ended Prohibition.

Civilian Conservation Corps - April 5: The program hired 3 million workers over the next 10 years to conserve public land. They planted forests, built flood barriers, and maintained roads and trails.

Agricultural Adjustment Act - May 12: This legislation subsidized farmers to reduce crops. It doubled crop prices by 1937. It was overturned by Supreme Court in 1936 because it taxed processors but gave funds to farmers. That was remedied in 1938.

Home Owners Refinancing Act - June 13: The act established the Home Owners Loan Corporation that refinanced mortgages to prevent foreclosures. It also provided additional capital to mortgage lenders. When it closed in 1935, it had refinanced 1 million homes, which was the equivalent of 20 percent of all urban mortgages.

National Industrial Recovery Act - June 16: This labor and consumer law set up the Public Works Administration to create public works jobs, like San Francisco's Golden Gate Bridge and New York City's Triborough Bridge. This law also created the National Recovery Administration. It outlawed child labor, established a minimum wage of $1.25, and limited the workday to eight hours. It gave trade unions the legal right to bargain with employers. It was declared unconstitutional in 1935.

In 1934, conservative businessmen criticized the New Deal as for being too socialistic. Others, like Louisiana politician Huey Long, said it didn't do enough for the poor. Despite their criticisms, FDR pushed for these additional programs:

Gold Reserve Act - January 30: FDR prohibited private gold ownership. He increased the price of gold to $35 per ounce, up from $20.67 per ounce where it had been for 100 years. That almost doubled the value of the gold held in Fort Knox from $4.033 billion to $7.348 billion, making the United States the world's largest owner of gold.

National Housing Act - June 27: This law established the Federal Housing Administration, which provides federal insurance for mortgages.

Securities Exchange Act – The law created the Securities and Exchange Commission, which regulates stocks and the stock market.

Federal Communications Act – The Act consolidated all federal regulation of telephone, telegraph, and radio communications under the Federal Communications Commission.

Second New Deal Programs

In 1935, the Supreme Court struck down the National Industrial Recovery Act. Concerned that other programs would also be eliminated, FDR launched the second round of New Deal programs. These focused on providing more services for the poor, the unemployed, and farmers. FDR spoke about helping the "...millions who never had a chance -- men at starvation wages, women in sweatshops, children at looms."

Emergency Relief Appropriation - April 8: The program replaced FERA and funded the new Works Progress Administration with $5 million. It employed 8.5 million people to build bridges, roads, public buildings, public parks, and airports. It paid artists to create 2,566 murals and 17,744 pieces of sculpture to decorate the public works.

National Labor Relations Act /Wagner Act - July: This law protected the rights of employees to organize and address working conditions, with or without a union, and created the National Labor Relations Board.

Resettlement Act - May: It created the Resettlement Administration that trained farmers and administered farm debt adjustment activities. It bought 10 million acres of submarginal farmland and paid farmers to convert it to pasture, preserves, or parks. It resettled farmers onto better land and taught them modern conservation and farming techniques.

Social Security Act - August: This law created the Social Security Trust Fund and Administration to provide income to the elderly, the blind, the disabled, and children in low-income

Third New Deal Programs

In 1937, FDR rolled out the Third New Deal. But as he was concerned about budget deficits, he did not fund it as much as the previous two.

In 1938, FDR abolished mark to market accounting. Some experts believed it forced many banks out of business. The rule forced banks to write down their real estate as values fell. FDR's new rule allowed them to keep these assets on their books at historical prices.

In 1939, FDR launched the Federal Security Agency. It administered Social Security, federal education funding, and food and drug safety. Congress abolished it in 1953.

Why the New Deal Was a Success

The New Deal worked. After FDR had launched the first New Deal, the economy grew 10.8 percent in 1934. When the second New Deal rolled out, the economy increased 8.9 percent in 1935 and 12.9 percent in 1936. After FDR cut government spending in 1937, the economy contracted 3.3 percent.

From 1932, the year before the New Deal, to 1941, when the U.S. entered the war, the debt only grew by $3 billion. The next year, defense spending quadrupled the amount added to the debt by a whopping $23 billion. The amount added tripled to $64 billion in 1943. If that much had been spent in the first year of the New Deal, it would have ended the Depression right there and then.

Some say the New Deal didn't work because the Depression lasted for 10 years. They point out that defense spending on World War II was the only thing that ended the Depression. But if FDR had spent the same amount on the New Deal as he did on war, it would have ended the Depression.

New Deal programs softened the extremes of the business cycle. Before the New Deal (1797-1932), there were 33 major economic downturns, 22 recessions, four depressions and seven bank runs and panics. They impacted 60 of the 132 years covered. Recessions were more severe than they are today because there weren't the New Deal federal agencies to control corruption, fraud, and exploitation.

How the New Deal Could Have Prevented World War II

Consider this. FDR spent thirty times more in 1943 on the war than he did in 1933 on the New Deal. There was no resistance on war spending as there was on domestic spending. No one was concerned about the budget deficit when the world was worried about Hitler's military dominance. But concerns about the budget deficit sabotaged the New Deal from ending the Depression's global economic catastrophe. Why do military threats engender so much more public support than economic ones?

If FDR had spent as much on the New Deal in 1933 as he did in the war in 1943, it would have ended the Depression by creating jobs, demand, and economic growth. The Depression's misery helped propel the German people to put the Nazis and Hitler in power. If FDR and the New Deal had ended the Depression in the early 1930s, the United States could have turned its resources sooner to helping its allies, Great Britain, and France. It would have at least shortened, if not prevented, World War II.

New Deal Timeline

1929. Hoover became president. The stock market crash in October kicked off the Depression. There was a $1 billion surplus. Unemployment at 3.2 percent.

1933. FDR took office. He immediately launched 15 programs under the First New Deal. This added $3 billion to debt. Depression started to lift, as economy only contracted 1.3 percent. Unemployment rose to 24.9 percent.

1934. The economy grew 10.8 percent, and unemployment fell to 21.7 percent. Five billion dollars was added to the debt.

1935. FDR launched the Second New Deal, adding $2 billion to debt. The economy grew 8.9 percent, and unemployment fell to 20.1 percent.

1936. The economy grew 12.9 percent, reducing unemployment to 16.9 percent. Five billion dollars was added to the debt.

1937. FDR started his second term. Fearing a budget deficit, he cut spending, only adding $3 billion to debt, despite rolling out the Third New Deal. The economy grew 5.1 percent, and unemployment fell to 14.3 percent.

1938. No more New Deal legislation was passed. Spending was cut, so only $1 billion was added to the debt. Unemployment rose to 19 percent. The economy shrank 3.3 percent.

1939. Dust Bowl drought ended. The United States spent to build up the military as Europe entered WWII. The expenditures added $3 billion to debt. The economy grew 8 percent, and unemployment fell to 17.2 percent.

1940. Unemployment fell to 14.6 percent as the United States started the draft. FDR won reelection. America assisted Great Britain by sending weapons. This added $3 billion to debt. The economy grew 8.8 percent.

1941. FDR began his third term. Japan attacked Pearl Harbor in December. The United States entered WWII. Spending eliminated the Depression and added $6 billion to debt. The economy grew 17.7 percent, and unemployment fell to 9.9 percent.

The Social Security program provides a guaranteed income for workers who have paid into the system. Most people are familiar with the retirement benefits which can also be extended to the retiree's spouse. But Social Security also pays disability benefits to eligible beneficiaries who become disabled before reaching retirement age. It pays children, surviving spouses, and dependent parents of eligible beneficiaries who die or become disabled. In some cases, it will even pay benefits to divorced spouses.

The minimum wage is the lowest legal wage companies can pay workers. As of 2019, the U.S. current national minimum wage is $7.25 per hour. The purpose of minimum wage laws is to stop employers from exploiting desperate workers. The minimum wage should provide enough income to afford a living wage. That is the amount needed to provide enough food, clothing, and shelter. Unfortunately, Congress hasn't raised it enough to pace with inflation. In fact, at 40 hours per week for 52 weeks, the minimum wage translates to $15,080 a year.

That is more than the federal poverty level for a single person but is lower than the poverty level for a family of four. In other words, if someone were trying to support a family by making minimum wage, they would qualify for federal poverty assistance.

The SEC regulates stocks, bonds, and mutual funds, making investing safer. The SEC also provides information to help you invest through Investor.gov. It provides basic education, such as how the markets work, asset allocation, and a review of the different retirement plans. It has a section on How to Select a Broker. It provides financial planning tools, such as how much you need to retire.

The FDIC insures savings, checking, and other deposit accounts up to $250,000 per account at each bank. For some joint accounts, the FDIC insures $250,000 per owner. The FDIC also examines and supervises about 5,250 banks, more than half of the total system. When a bank fails, the FDIC steps in. It sells the bank to another one and transfers the depositors to the purchasing bank. The transition is seamless from the customer's point of view.